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Employment Insurance Premium Reduction
Program For Employers

Employment Insurance Act s. 69(1)

Employers who provide a wage-loss replacement plan for
short-term disability for illness of or
injury to their employees may be able to qualify for a reduction in their EI
premium rate. To be considered for the Premium Reduction Program,
the wage-loss replacement plan must:

provide at least 15 weeks of benefits for
short-term disability

match or exceed the level of benefits provided
under EI

pay benefits to employees after 14 days of illness
or injury

be accessible to employees within 3 months of
hiring

cover employees on a 24-hour-a-day basis

There are 4 different categories for reduced premiums,
with varying rates of savings. The employer pays a reduced multiple times the employee premiums, instead of the regular 1.4 times.

The employer premiums are reduced by reducing the
factor that is applied to the employee premiums. Normally, employers
pay 1.4 times the total of employee premiums. There are 4 different categories for reduced premiums,
with varying rates of savings.

Although it is only
the employer portion of the premium that is reduced, it is a requirement
of the Premium Reduction Program that the employer return 5/12 of the
savings to the employee. Although a cash
rebate (taxable and insurable) can be provided to the employee, other
arrangements can be made to satisfy Service Canada that a portion of the
savings is being returned to employees, including:

a written mutual agreement between employer and
employees or their representatives on the method of returning the
employees' portion of the premium reduction;

new employee benefits provided as a result of the
premium reduction, such as a dental plan, group life insurance; or

increased employee benefits or upgrading of
existing benefits, such as more holidays, more time off work,
increased life insurance.